MannKind Gains, Acorda Therapeutics Loses as Trial Results Released

By Ben Levisohn

Acorda Therapeutics, Inc. today announced data from a Phase 2 proof-of-concept study of dalfampridine extended release tablets, 10 mg (dalfampridine-ER) in people with post-stroke deficits. In the study, treatment with dalfampridine-ER was well-tolerated and improved walking, as measured by the Timed 25-Foot Walk test (T25FW).

RBC Capital Markets’ Michael Yee and team put the news in context:

In the short-term, ACOR’s scripts look a bit mediocre tracking a tad shy of Q3 consensus, and overall new scripts are down too. Longerterm, we believe value creation will need to come from 1) expanding the label to a new indication in “post-stroke” pts which is going into Phase II/III and could theoretically double the commercial sales, 2) its re-myelinating antibody rHigM22 in Phase I might get attention because Biogen’s Phase II LINGO re-myelinating program could be very intriguing in H2:14. Risks are that a Paragraph IV should be expected in January 2014 around the corner and the “post-stroke” data is interesting but not as compelling versus the MS indication. Overall, however this will take some time to play out as the next post-stroke study doesn’t even begin until Q2:14 so data not until at least 2015+. That said, expectations are pretty low and we think the stock is pretty cheap at $1.1B EV or ~3x sales plus all potential upside from label expansion or pipeline.

MannKind (MNKD), meanwhile, has gained after asking the FDA to approve its inhaled diabetes drug Afrezza. The Associated Presshas the details:

MannKind has no drugs on the market. It first filed for Food and Drug Administration approval of Afrezza in March 2009, and in early 2011 the FDA told the company to run more clinical studies. The agency wanted MannKind to use the studies to compare its new inhaler with an older inhaler that was used in previous studies. In August, MannKind said drug met its goals in both trials.

Cowen’s Simos Simeonidis and team warn investors that an FDA approval is not guaranteed:

It appears that the company did these two trials after working closely with FDA, and despite some potential debate about secondary endpoints, which we consider more relevant to commercial impact vs. approvability, both trials met their primary endpoints. So, if AFREZZA were almost any other product, that had met both primary endpoints in two Phase III trials designed after close discussions with FDA, the third time around, approval would probably not be in much debate. However, given that this is AFREZZA, which could be a paradigm-shifting drug on the one hand, has the potential to be used by millions of patients, is a growth factor that is rapidly inhaled into the lungs, and would be the second inhalable insulin, after a product that had potential links (even if they were never fully established, and even if AFREZZA has been shown to have a clean safety profile, up to now) to lung damage and lung cancer, we believe that an approval should not be considered a foregone conclusion. Though we believe that AFREZZA should be approved, based on what has been communicated by MannKind regarding their interactions with the
FDA, especially the agency’s willingness and interest in approving AFREZZA, if its full dataset establishes its safety, we also believe there is still the outside chance of a negative surprise in the form of the agency asking MannKind to jump through additional hoops.

Acorda has dropped 6.3% to $33.12 today at 2pm, while MannKind has gained 5.1% to $5.37. Vertexs Pharmaceuticals (VRTX) has gained 3.3% to $73.25, Celldex Therapeutics (CLDX) has jumped 2.4% to $27.86 and Gilead Sciences (GILD) has ticked up 0.8% to $63.18.

About Stocks To Watch

Earnings reports, corporate strategies and analyst insights are all part of what moves stocks, and they’re all covered by the Stocks to Watch blog. We also look at macro issues, investor sentiments and hidden trends that are affecting the market. Stocks to Watch gives you the full picture of the U.S. stock markets, all day long.

The blog is written by Ben Levisohn, a former stock trader who has covered financial markets for the Wall Street Journal, Bloomberg and BusinessWeek.